Interest on assessed differential tax cannot be levied under a default provision after final assessment.

Interest under section 12(1B) of the Karnataka Sales Tax Act could not be levied on tax first found due only after a best judgment assessment under section 12(3). The provision applied to default in payment of admitted or returned tax, whereas post-assessment non-payment of the assessed differential was governed by the statutory consequences attaching to the demand notice and the relevant rules. As the dealer paid the balance within the time allowed under the notice, the levy of interest under section 12(1B) was unsustainable and the Tribunal's order was upheld.

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Issues: Whether interest under section 12(1B) of the Karnataka Sales Tax Act, 1957 is attracted where tax is found due pursuant to a best judgment assessment under section 12(3) and the dealer pays the differential tax within the time allowed under the demand notice.

Analysis: The statutory scheme distinguishes between liability arising from default in payment of tax shown as due in the return and liability arising after final assessment. Section 12(1B) governs short-payment or non-payment of tax due in the return and provides for interest on such default. Where the assessing authority completes assessment under section 12(3) and issues a demand for the balance tax, the dealer is given time to pay the assessed difference. If the balance is not paid within that period, interest is recoverable under section 13 and the applicable rules, not under section 12(1B). The earlier Constitution Bench principle relied on the same distinction between pre-assessment default and post-assessment demand.

Conclusion: Section 12(1B) is not attracted to interest on tax found due on final assessment under section 12(3); the levy of interest under that provision was unsustainable.

Final Conclusion: The revision petitions failed because the demand of interest under section 12(1B) on the assessed differential tax was legally incorrect, and the Tribunal's order was upheld.

Ratio Decidendi: Interest under a provision governing default in payment of admitted or returned tax cannot be levied on tax first found due only upon final assessment, where the statute separately provides for consequence of non-payment after the demand notice.

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